Limits on Effects of Order Determining Homestead on Title

A recent appellate decision addresses the effect of an order determining homestead vis-à-vis title to the homestead. In the case, a decedent left her homestead by will to her three children. The will also provided a life estate in the property to two of the children. The probate court entered an order determining homestead, which determined that the homestead property was divided in equal shares to the children, but did not mention the life estate provided for in the will. The trial court determined the order determining homestead divested the life tenants from their life estate per the absence of any mention of the life estate (thus allowing partition of the property to proceed on petition of two of the children). Florida’s 5th DCA reversed the trial court, and held that the order determining homestead did not terminate the life estate provided for in the decedent’s will.[1] The appellate court noted that the homestead order did not create new rights, but only explained or clarified the rights that already existed by operation of law.

The appellate court rejected arguments that the children’s consents to the homestead order altered the parties’ individual interests in the estate. It also ruled that the order was not a title transaction within the meaning of Fla.Stats. §712.01(3) noting:

the Homestead Order in this case does not constitute a title transaction, as defined by section 712.01(3), Florida Statutes (2011), extinguishing the life estates in the property. ‘A title transaction within the meaning of this act is defined in section 712.01(3), Florida Statutes, and means any recorded instrument or court proceeding which affects title to any estate or interest in land and which describes the land affected with legal sufficiency.’ Cunningham v. Haley, 501 So. 2d 649, 652 (Fla. 5th DCA 1986). Although the probate and recording of a will constitutes a title transaction within the meaning of section 712.01(3), see Mayo v. Owens, 367 So. 2d 1054, 1057 (Fla. 1st DCA 1979); Kittrell v. Clark, 363 So. 2d 373 (Fla. 1st DCA 1978), Kenneth and Carla point to no authority holding or suggesting that an order determining homestead property constitutes the same.

Mullins v. Mullins, No. 5D18-1672, 2019 WL 2396753, at *4 (Fla. Dist. Ct. App. June 7, 2019)noting

Documentary Stamp Tax Newlywed Exception Now Applies to All Married Persons [Florida]

Generally, transfers of real property in Florida are subject to documentary stamp taxes based on the consideration paid. If the real property is subject to a mortgage when transferred, the unpaid balance of the mortgage is counted as consideration for this purpose.

There is no general exception to this rule for transfers between spouses. However, Fla.Stats. §201.02(7)(b) does provide that no documentary stamp taxes will apply to a transfer of homestead property between spouses (a) if the only consideration is the mortgage debt, and (b) the deed or other instrument of transfer is recorded within 1 year of the marriage. Many questioned why this exception was limited to newlyweds.

Effective July 1, 2019, requirement (b) above no longer will apply, per Florida House Bill No. 7123 which has been enacted into law. Thus, spouses can transfer homestead property between themselves, even if encumbered by a mortgage, without documentary stamp taxes – so long as there is no other consideration for the transfer other than the mortgage.